Issue #433
June 28, 2015
The Oasis

Newsletter


The newsletter with chart analysis for stocks and stock indexes

Stock Indexes Analysis/Evaluation


Greek Debt Problem Pivotal to the Market this week!

DOW Friday closing price - 17946

The DOW generated a negative reversal week, having gone above the previous week's high and then closing in the red. The weekly close, makes the previous week's close at 18115 into a successful retest of the all-time high at 18312 as well as of the decent weekly close resistance area between 18112 and 18127. The index closed on the lows of the week, suggesting further downside below last week's low at 17890 will be seen this week.

The DOW chart does suggest that enough has been done to the upside that the bears might now have a slight edge. By the same token, no support levels of consequence have been broken to the downside, also suggesting that a sideways trading range with a very slight bias to the downside is the most likely scenario.

To the upside and on an intra-week basis, the DOW now shows decent resistance between 18167 and 18205 and then at 18288 and at the all-time high at 18351. Nonetheless, any break above 18205 might be a sign that the bulls regained control. To the downside, there is minor support at Thursday's low at 17890 and then nothing of consequence until the area between 17714 and 17774 is reached. Further support is found at the 200-day MA, currently at 17670 and then nothing until the low for the past 4 months is reached at 17579.

The DOW has been trading mostly in a 700 point trading range between 17600 and 18300 for the past 4 months without the bulls or the bears being able to generate any kind of meaningful trend. The action has been mostly "yo-yo" type with both highs and lows having been seen repeatedly. It is evident that some catalyst needs to occur for the index to be able to get out of this sideways trading range.

Nonetheless, the DOW had not yet generated a true test on the weekly chart of the all-time high at 18351 until these past 2 weeks when the index rallied up to 18188 and then closed in the red on Friday. The successful retest of the highs was technically needed before the traders could start even thinking about turning their bullish outlook around. As such, it can now be said the bulls need some fundamentally bullish news to stimulate new buying interest. With the Greek debt situation now unlikely to be resolved by the June 30st deadline, it is going to be difficult for the bulls to generate any new buying interest.

The chart probabilities now slightly favor the bears, inasmuch as it can be said the chart is "fulfilled" to the upside, at least as far as resistance levels are concerned.

NASDAQ Friday closing price - 5080

The NASDAQ generated a negative reversal week, having made a new all-time high at 5164 and then closing in the red and near the lows of the week, suggesting further downside below last week's low at 5060 will be seen this week.

In addition, the NASDAQ gave a failure to follow through signal on the daily chart, having closed on Friday below the previous all-time high daily close at 5092 that was generated on April 20th. By the same token, the weekly chart did not confirm the failure signal as the index still closed above the previous all-time high weekly close at 5048 that was generated on March 2000, meaning that further weakness will need to be seen this week, as well as a close next Friday below 5048 for all the negatives to be confirmed.

To the upside, the NASDAQ now shows intra-week resistance at 5114, at 5132 and stronger at 5164. To the downside, minor support is found and then a bit stronger at 5016. Important and pivotal support is found at 4974. Below that level, support is found between 4688 and 4912 and then nothing of consequence until decent to perhaps strong support is found at 4825.

The NASDAQ underperformed the other indexes this past week and that could be significant because the NASDAQ has been the leader during this past year, having rallied close to 12% while the other indexes have rallied about 7%. As such, the index giving up the leadership this past week could be a sign of profit taking as well as of a top having been formed.

In the NASDAQ and based on the charts, the probabilities favor the bears this week.

SPX Friday closing price - 2101

The SPX generated a negative reversal week, having made a new 5-week high but then closing in the red and on the lows of the week, suggesting further downside below last week's low at 2095 will be seen this week. In addition, if the index does go below last week's low it will also make last week's high at 2129 into a successful retest of the all-time high at 2135, which would be seen as a strong sign that a top to the rally has been built.

The SPX chart feels tired, having only seen an appreciation of 13 points over the past 6 months (closed at 2088 on the third week of December and at 2101 on Friday) even though the bulls have remained in control during this period of time. The inability of the bulls to generate further upside will start weighing heavily, especially now that the all-time high has likely been tested successfully.

To the upside, the SPX shows intra-week resistance at 2129 and stronger at the all-time high at 2135. To the downside, minor intra-week support is found at 2085. Pivotal support is found at 2072 and then nothing until the 200-day MA, currently at 2055. Important and likely mid-term pivotal support is found at 2039, which if broken would be a strong bearish sign.

The probabilities slightly favor the bulls in the SPX but the index continues to be more of a follower than a leader and will likely to what the other indexes do.


The Greek debt problem took a turn for the worse over the weekend as the Greek President Tsipras called for a referendum to decide whether the people wanted to accept the increased austerity or not (which is a requisite for an extension of the loan) and the referendum itself means the country is unlikely to meet its debt obligation to pay $1.7 million Euros on June 30th, suggesting the default will occur.

The probabilities are now high that the market will open lower on Monday and if key support levels are broken, the computers are likely to push the market into a selling spree that would be difficult to stop (even if some compromise is reached with the Greeks thereafter), especially since the Greek problem is not the main reason the market has stalled for the past 6 months.

It is evident that this coming week is pivotal as everything seems to have come to a point where up or down (not sideways) seems to be the only options available.

Stock Analysis/Evaluation
CHART Outlooks

With the indexes likely to open lower (perhaps substantially lower) on Monday, based on the likelihood of the Greek debt default, it is close to impossible to choose any intelligent entry points into any short positions without knowing where the market and the stocks themselves will open up on Monday. In addition, with the reason for the likely lower open still being capable of turning around "in a minute" if some deal is struck between the Greeks and the IMF, it does not make sense to "chase" anything until more is known.

As such, there will be no mentions in the newsletter this week. Nonetheless, once the action is seen and if some of the important support levels are broken, mentions will be given in the message board.

Updates
Updates on Held Stocks
Closed Trades, Open Positions and Stop Loss Changes

AREX generated a positive reversal, having made a new 12-week low but then closing in the green. The green close breaks a streak of 7-red weekly closes in a row and does make the previous week's close at 6.59 into a successful retest of the previous low weekly close at 6.48, seen in March. In addition, the green weekly close keeps the 7-month uptrend intact, suggesting that the stock should go back up to retest the resistance at 9.15 or the 8-month high at 9.57. The bulls need to make sure though, that the positive reversal week is confirmed with another green close next Friday. Minor intra-day resistance is found at 6.91 that if broken would suggest at least a run to the next minor resistance at 7.59. Intra-week support is now important and pivotal at last week's low at 6.38. Probabilities now slightly favor the bulls.

ARNA had an uneventful inside week, but did generate a positive reversal day on Friday, having made a new 7-day low but then closing in the green and on the highs of the day. If the stock is able to get above Friday's high at 4.40 on Monday, Thursday's close at 4.33 will become a successful retest of the 200-day MA, currently at 4.30, and should generate some new buying interest. Minor resistance at 4.42, at 4.45 and at the recent high at 4.57. A break above 4.57 will generate a new buy signal on the daily chart. Support should now be found at Friday's low at 4.29. Probabilities favor the bulls.

COF got up to the previous all-time high at 90.04 with a high this past week at 89.99. Nonetheless, selling interest was seen at that level as the stock closed in the bottom half of the week's trading range, suggesting the stock will go below last week's low at 88.52 this week. If the stock does go below last week's low this week, a double top of consequence will be generated on the intra-week chart, which in turn would suggest the bulls would need further positive news or help from the indexes to regenerate any new buying interest. Minor support is found at 88.52 but below that level there is no previous support built until the $85 level is reached. Further support, is found at 83.05 and then at the 200-day MA, currently at 81.35. Resistance is found at the $90 demilitarized zone. Probabilities now slightly favor the bears, at least for a short-term correction.

ENG generated a very minor break of the weekly close support at 1.42, having closed on Friday at 1.40. Nonetheless, the bulls were able to close the stock slightly in the upper half of the week's trading range, meaning that if the stock goes above last week's high at 1.45 and generates a green close next Friday, that the support level held up and that some upward movement would likely be seen. Minor daily close resistance is found at 1.41 and intra-week support is found at 1.32 and at 1.35. Any daily close above 1.45 would suggest the "tide has turned" toward the bull side. Probabilities slightly favor the bulls but barely.

FCEL generated what could end up being a spike low, having gone down to .86 and then turning around to close unchanged but near the highs of the week, suggesting further upside above last week's high at 1.06 will be seen this week. The chart shows decent to perhaps even strong intra-week support at .84, meaning that the week's low at .86 will end up being a successful retest of that level if the stock gets above last week's high. Minor but short-term pivotal resistance is found at 1.08 and then stronger at 1.18, which is a level that should be reached should the bulls get the stock above 1.08. The resistance at 1.18 though, is going to be a tough nut to crack at this time, without some fundamental help. Probabilities favor the stock getting into a trading range between .92 and 1.18 for the foreseeable future.

FSLR generated a red weekly close and on the lows of the week, suggesting further downside, below last week's low at 49.65 will be seen this week. Support is found between 49.01 and 49.26 but the chart suggests the support will break and that the stock will move down to the $47 level, which has been the downside objective since the stock broke down below the 200-day MA back in May. Probabilities continue to favor the stock being in a trading range between $47 to $53 for the foreseeable future but it does seem the low end of that trading range will be the next to be seen. Resistance is now at the recent high at 53.67, which is also now where the 200-day MA is currently located.

NFX generated a new 7-week high at 38.64 (above the previous high at 38.48) but then reversed to close on the lows of the week, suggesting further downside below last week's low at 36.40 will be seen this week. The failure to generate new buying on the 7-week high is likely to bring in renewed selling interest. Daily close support is found between 36.15 and 36.37 and then likely pivotal at 34.54. On a weekly closing basis though, the support is at 35.54 that if broken would suggest a drop down to the 200-week MA, currently at 31.90, or at least down to the 200-day MA, currently at 32.80. Pivotal resistance is now found at 38.48/38.64. Probabilities now favor the bears.

PRAA made a new all-time weekly closing high on Friday, having closed 31 points above the previous high at 63.25 seen in October of last year. Nonetheless, it should be mentioned that the 63.25 close had also been a breakout above the previous all-time high weekly close seen in October 2013 at 62.13 and on that occasion no follow through was seen and within a few weeks the stock had dropped back down to 47.87. As such, the same situation could occur this time. It should also be mentioned that the all-time intra-week high at 65.00 was not broken (stock got up to 64.23 this past week) and that also suggests that the bulls may not yet have the upper hand, especially given than on an intra-week basis, the highs the past 2 years have been 63.96 and 65.00, suggesting this area on an intra-week basis is strong resistance. The stock closed in the middle of the week's trading range and the probabilities favor the stock following what the indexes do this week. Resistance remains at 65.00. Support is minor at 60.00 and previous intra-week low of any consequence is not found until 56.20. Probabilities slightly favor the bears.

SINA gave a failure signal on Friday, having closed decisively below the 200-week MA (currently at 58.00) that the bulls had managed to break to the upside 2 weeks ago. The stock closed on the lows of the week and further downside below last week's low at 53.23 is likely to be seen this week. Minor to perhaps decent intra-week support is found at 51.26, which does include the previous 14-month weekly closing high from which the stock broke out of at 50.70. Drops down to that area are now likely. Nonetheless, any weekly close below 50.70, especially below the bottom of the $50 demilitarized zone at 49.70, would suggest the stock will head down to the 45.68 level where support is also found. Probabilities favor the stock getting down to 51.26 but consideration should be given to taking profits at that area. Minor resistance is now found at 57.87. By the same token, the stock gapped down on Friday between 56.04 and 55.10 and if the bulls fail to close that gap, momentum to the downside could be seen.

TOL generated another green weekly close (4th in a row), as well as a close above the previous high weekly close at 37.69, suggesting that the bulls have gotten some of their "mojo" back. Nonetheless, the bulls were barely able to close the stock above a previous but somewhat pivotal weekly close resistance at 38.31, also suggesting the bulls are not totally back in control yet. Minor to decent intra-week resistance is found between 38.96 and 39.06 that if the bulls are unable to break above this coming week, would suggest the stock will fall back to at least 36.62. Nonetheless, the action seen the past week does suggest the original downside objective of getting down to the 200-week MA, currently at 31.60, is going to be difficult to achieve. As such, some consideration should be given to covering shorts on the next dip down.

VHC got down near the 5-year weekly close support level at 4.09 with a close on Friday at 4.31. The stock closed in the bottom half of the week's trading range, suggesting further downside below last week's low at 4.02 will be seen this week. Nonetheless, intra-week support is found at 3.80 and going all the way back to 2010, support on a weekly close basis is found between 3.70 and 3.80, meaning that this is a level where buying interest should be seen. The stock did generate a positive reversal day on Friday, having gone below Thursday's low and then closing above Thursday's high, suggesting the first course of action for the week will be to the upside. Daily close resistance is found at 4.94 but if the bulls are able to generate a rally above last week's high at 4.82, much of the sell pressure will be relieved. Probabilities continue to favor the bears but this area of support is going to be difficult to break.

XOM was unable to follow through on the previous week's green close as the bears were able to close the stock below the previous week's close at 84.02. The stock closed on the low of the week and further downside below last week's low at 83.49 is expected to be seen. Intra-week support is found at 83.19 and a bit stronger at 82.68. If 82.68 is broken, there is no support until the $80 level is reached. Though the intra-week support levels have not yet been broken, the failure of the bulls to generate follow through buying this past week is a strong negative that suggests the bulls need a positive fundamental change to prevent the stock from heading lower. Pivotal resistance remains between 85.96 and 86.37. Probabilities favor the bears.


1) FCEL - Averaged long at 2.227 (4 mentions). No stop loss at this time. Stock closed on Friday at 1.03.

2) ENG - Averaged long at 1.92 (3 mentions). No stop loss at present. Stock closed on Friday at 1.40.

3) FSLR - Averaged long at 59.404 (4 mentions). No stop loss at present. Stock closed on Friday at 49.95.

4) AREX - Averaged long at 6.28 (4 mentions). Stop loss now at 5.99. Stock closed on Friday at 6.80.

5) ARNA - Averaged long at 4.30 (3 mentions). No stop loss at present. Stock closed on Friday at 4.39.

6) TOL - Averaged short at 37.45 (2 mentions). Stop is now at 39.02. Stock closed on Friday at 38.39.

7) SINA - Averaged short at 60.57 (2 mentions). Stop loss now at 61.35. Stock closed on Friday at 54.06.

8) NFX - Averaged short at 38.94 (2 mentions). Stop loss at 40.35. Stock closed on Friday at 36.47.

9) COF - Averaged short at 84.66 (3 mentions). No stop loss at present. Stock closed on Friday at 89.06.

10) XOM - Averaged short at 85.933 (3 mentions). Stop loss now at 86.47. Stock closed on Friday at 83.86.

11) KMX - Covered shorts at 68.71. Shorted at 73.52. Profit on the trade of $481 per 100 shares minus commissions.

12) PRAA - Shorted at 63.87. Stop loss is at 65.35. Stock closed on Friday at 63.56.

13) VHC - Purchased at 4.17. Stop loss is at 3.65. Stock closed on Friday at 4.30.


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Disclaimer

The opinions and commentaries by Mr. De Vito are not a recommendation to buy or sell, but rather a charting guideline, based on his own knowledge and experience, regarding the stocks he is following or that are brought to him by others. Mr. De Vito does not presently offer a track record of his trading experiences. No inference of success and/or failure should be assumed. The information enclosed above, regarding his background, length of trading, and experience, is correct but is not meant to suggest, state, or infer any future success in trading, based on his opinions.

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